FreeCharge's only competition is with 'cash': CEO Govind Rajan

The Central government’s decision to ban Rs 500 and Rs 1,000 notes sent shockwaves across the country. The demonetisation drive, aimed at curbing the menace of black money, is in line with the Narendra Modi government’s push for Digital India. But the move has also resulted in a severe cash crunch. This is where mobile wallets and e-payments have come into the picture as a quicker and more efficient alternative.

FreeCharge CEO Govind Rajan believes the move is a game changer. He speaks with experience having spent more than 15 years of his professional life at Hindustan Unilever, where he drove business outcomes across a range of brands including Dove, Ponds, Fair & Lovely, Vaseline, Lakme, Pears, Lifebuoy, Lux. Building on his rich FMCG experience, he joined Airtel as the Chief Marketing Officer (B2C) and also the CEO of Airtel Money.

An alumnus of Indian Institute of Foreign Trade (IIFT), Rajan joined FreeCharge in August 2015 as the COO and was soon elevated to the position of CEO. He talks about the government’s push towards “less cash” and more digital transactions.

E-wallets are on everyone’s mind right now. What’s the scene on the ground right now?

In a cash-rich country like India, it’s definitely a massive structural change. For the first time, e-payments are being seen as the more preferred mode of payment. The growth of a few years will be compressed into a few quarters.

While consumer trends were always very encouraging in terms of repeat usage by users, we saw more people turning to online options after the demonetisation. We’ve witnessed 12x overnight jump in the average wallet balance. With the demand increase, almost every digital payment solutions venture is focusing on getting people to use their solutions even for offline transactions. And that’s really the big opportunity, given that online transactions are still a tiny portion of the overall transactions in India.

How did FreeCharge manage the sudden surge in business?

We made a bold bet 18 months ago to combine payments and commerce. That gave us a headway in building solid processes. Our infrastructure is built to scale and the processes are robust enough to handle a growth spurt. Our team has been working round the clock and projects have been re-prioritised to cater to immediate requirements. We were already in the midst of scaling up and after the announcement, we were able to swiftly absorb the opportunity. It’s not about grabbing business for us, but also making sure that users understand what they can do with digital payments.

How would you explain digital wallets to a wary customer?

Simply put, it’s a mobile wallet that is connected to an individual’s bank account, helping him pay for his daily expenses without any cash. You can use the wallet for online shopping, paying bills and also making everyday purchases at your neighbourhood stores. Instead of counting notes, you pay through a few taps on your phone. It’s the future for the millennials. For older folks (like me) and our parents, this change will help us leapfrog the inertia that holds back adaptation.

There are many payment wallets. How are you different from your competition?

Our competition is with cash, which, even today, is the primary mode of transaction in India. We are obsessed about keeping it simple through an uncluttered user interface. FreeCharge has been designed in India and for its operating conditions. It can work without any network access through our proprietary On-theGo-Pin technology, which removes the need to wait for an OTP. One interesting feature allows users to split bills, settle accounts, send and ask for payments from friends. We ran the “Lo Do Khatam Karo” campaign around this.

So, does that make FreeCharge a better option?

Our philosophy is to make payments fast and frictionless. We aren’t trying to sell you something. FreeCharge focuses on enhancing consumer experience by building an easy and uncomplicated user interface. Most of our payments are completed within 10 seconds. We insure up to Rs 20,000 in the wallet. So, if your phone is lost, your money is safe.

Security seems to be a big concern for users in India. How have you addressed this issue?

We aim to provide the best and most secure payments experience. There is an in-house state-of-the-art Fraud & Risk Management System that ensures that we understand our consumers and the risks associated in a better way. We are compliant with all major security standards. We run more than 500 algorithms and checks to identify a risky transaction/user, and have a feature to alert a user regarding any login from a new device. There are algorithms to do active/passive authentications to give our users the best experience while maintaining global standard security and authentications at all times.

What is the current monthly transaction limit on FreeCharge?

The RBI recently allowed users to load up to Rs 20,000 in their wallet every month without the need for KYC. With KYC, the limit is Rs 1,00,000.

Merchants can withdraw up to Rs 20,000 without KYC and can enjoy unlimited direct settlements to their bank account on submission of full KYC documents.

Since the demonetisation, we are charging zero commission or setup fee from merchants. This means that 100 per cent of the payments made by users will be credited to the seller’s account. With this move, we have a new merchant on board every 30 seconds. The transaction charges for the merchants vary. However, it’s the most competitive in the industry and we give the best rates to our merchants depending on their business and needs.

What kind of offers does FreeCharge offer its customers?

We recently ran a two-day ‘Flat 100% Cashback Sale’, which saw users get great deals on movie tickets, meals and online shopping. We saw more than 3,00,000 new wallets being created just during that period. To incentivise going cashless, we offered discounts at petrol pumps and wallet usage went up nearly 15 times.

What’s been the best consumer feedback you’ve received?

I think the best feedback I have received is from my own mother, who is also my biggest critic. She loves the ‘Auto Pay’ option that helps her pay her bills. She sat with me and set the dates on which she needs to make all the payments. Now, she gets a reminder every month about the due dates before initiating the payment process.

Any merchant testimonials that made your day?

There are a lot of stories, but one of the more gratifying ones was from a tea stall in South Extension in New Delhi. His work had stalled because he was forced to extend credit, which he couldn’t afford. Four days into the crunch, the FreeCharge merchant support team signed him up and helped him start the wallet. When we contacted him a week later, his business was back on track and he had helped four more merchants revive their businesses.

What is the least and highest amount that you either paid or received through FreeCharge?

During one of my recent travels to Delhi from Bengaluru, I had to buy a bottle of water at the airport, but I had no change. I purchased a bottle of water for `50 and paid through FreeCharge in less than 10 seconds. FreeCharge’s partnership with airport outlets like TFS and Lite Bite Foods helps facilitate mobile payments at select food outlets. In another incident, I was at the airport on my way back to Bengaluru and my late night flight was delayed by two hours. I could book a new flight ticket through my FreeCharge since the RBI has increased the monthly transaction limit to Rs 20,000.

What do you think will be the future of mobile wallets in a country like India?

Digital payments will be huge in India and e-wallets will lead the way. The acceptance and adoption is increasing by leaps and bounds and we find that users come for the deals and stay for the convenience and experience.

The penetration of smartphones, fast spread of internet and the rapidly growing online retail segment are huge pillars of growth. The alliances with retailers (both online and offline), banks and technology firms will enhance the ecosystem of digital payments. Initiatives such as Aadhaar and UPI will also have a catalytic effect on the industry.

India may not become cashless soon, but we have started on a less cash journey and that will reap big benefits to the economy.